Equity ain’t just for homeowners anymore

Startups help renters reap benefits of investing in their homes.

July 3, 2020

Conventional wisdom says renters throw away money because they don’t build equity over time. But a couple of new startups are hoping to turn that idea on its head.

The security of ownership meets the flexibility of renting 

Rhove extends “renterships” to tenants in Rhove-partnered apartment complexes. The arrangements give tenants a stake in the building — and their assets grow with the property’s value.

Rhove acts as an investor in the property by paying a lump sum to the owners. Tenants earn returns as property owners collect rent from the whole building, and as the property appreciates, the value of the shares increases.

Nico offers a similar concept.

The startup launched in LA’s Echo Park neighborhood, where gentrification threatened to push out some long-time residents. By purchasing rent-stabilized buildings and registering them as a financial trust, Nico offers portfolio shares to residents… giving them a leg up in keeping their homes.

What’s the bottom line?

A young person will spend $200k+ in rent over the course of his or her lifetime. With many Americans dropping ⅓ of their income on rent, it’s hard to save money to eventually buy a home.

And renters generally don’t have the same opportunities to accrue wealth as homeowners. One study found wide wealth gaps between older homeowners and renters, even when their incomes are similar.

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